Business / Economy
Zimbabwe deflation continues to thaw
16 Jun 2014 at 15:12hrs | Views
Zimbabwe's deflation has continued to thaw but remaining in the negative after the annual inflation rate gained 0,07 percentage points to -0,19 percent.
Figures from the Zimbabwe National Statistical Agency the annual rate of inflation for May improved slightly from -0,26 percent in April.
"This means that prices, as measured by the all items CPI decreased by an average of 0,19 percentage points between May 2013 and May 2014," ZimStats said.
The inflation rate measures a broad rise or fall in prices that consumers pay for a standard basket of goods.
Zimbabwe entered deflation in February as liquidity conditions tightened while aggregate demand kept declining due to lower disposable incomes.
During deflation, when the annual rate of inflation falls below zero, companies cannot increase prices of goods; instead, they cut prices even when costs are rising. Some economic analysts however believe the deflationary period is temporary as it is a gradual climb down from dollar-induced inflation the economy went through after adopting multi-currencies.
More pessimistic observers contend that the current deflationary state is real and could affect the country for a long time as deflation is typically notorious to come out of.
They believe that the current thawing of deflation is simply a reaction to the tobacco marketing season, which has helped to liquefy the economy.
On a month on month basis, inflation rate in May was -0,13 percent after shedding off 0,71 percentage points on the April rate of 0,58 percent.
The year-on year food and non-alcoholic beverages inflation stood at -3,75 percent whilst the non-food inflation rate was 1,62 percent.
The month-on-month food and non-alcoholic beverages inflation stood at -0,30 percent, gaining 0,16 percentage points on the April rate of -0,46 percent.
the month on month non-food inflation stood at minus 0,05 percent shedding -1,14 percentage points on the April rate of 1,09 percent.
Figures from the Zimbabwe National Statistical Agency the annual rate of inflation for May improved slightly from -0,26 percent in April.
"This means that prices, as measured by the all items CPI decreased by an average of 0,19 percentage points between May 2013 and May 2014," ZimStats said.
The inflation rate measures a broad rise or fall in prices that consumers pay for a standard basket of goods.
Zimbabwe entered deflation in February as liquidity conditions tightened while aggregate demand kept declining due to lower disposable incomes.
During deflation, when the annual rate of inflation falls below zero, companies cannot increase prices of goods; instead, they cut prices even when costs are rising. Some economic analysts however believe the deflationary period is temporary as it is a gradual climb down from dollar-induced inflation the economy went through after adopting multi-currencies.
More pessimistic observers contend that the current deflationary state is real and could affect the country for a long time as deflation is typically notorious to come out of.
They believe that the current thawing of deflation is simply a reaction to the tobacco marketing season, which has helped to liquefy the economy.
On a month on month basis, inflation rate in May was -0,13 percent after shedding off 0,71 percentage points on the April rate of 0,58 percent.
The year-on year food and non-alcoholic beverages inflation stood at -3,75 percent whilst the non-food inflation rate was 1,62 percent.
The month-on-month food and non-alcoholic beverages inflation stood at -0,30 percent, gaining 0,16 percentage points on the April rate of -0,46 percent.
the month on month non-food inflation stood at minus 0,05 percent shedding -1,14 percentage points on the April rate of 1,09 percent.
Source - BH24
